Standing Committee B

[Mr. John McWilliam in the Chair]

Finance Bill

(Except clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and schedules 5, 6, 19 and 25, and any new clauses and schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.) - Clause 7 - General betting duty: betting exchanges

Amendment proposed [this day]: No. 126, in 
clause 7, page 5, line 4, after 'one person' insert '(''the bettor'')'.—[Mr. George Howarth.]
 Question again proposed, That the amendment be made.

John McWilliam: I remind the Committee that with this we are discussing the following:
 Amendment No. 127, in 
clause 7, page 5, line 4, after 'another person', insert '(''the bet-taker'')'.
 Amendment No. 128, in 
clause 7, page 5, line 5, after 'third person', insert '(''the operator'')'. 
 [R] Relevant registered interest declared.
 Amendment No. 129, in 
clause 7, page 5, line 8, leave out subsections (2) to (4) and insert— 
 '(2) For the purposes of sections 2 to 5B as modified by subsection (5)— 
 (a) the bet shall be treated as if it were made by the bettor with the operator and not with the bet-taker, and 
 (b) the operator shall be treated as a bookmaker in respect of the bet. 
 (3) But subsection (2) does not apply to a bet if— 
 (a) the bet-taker holds a bookmaker's permit, and 
 (b) the bet would not be an on-course bet if the operator were making the bet with the bet-taker as principal. 
 (4) Section 2 (Bookmakers: general bets) is modified as follows— 
 (a) in subsection (3) for ''15 per cent of the amount of his net stake receipts for that period.' substitute 'the aggregate for that period of the amounts of duty charged in respect of each individual bet-taker using facilities provided by him.''. 
 (b) after subsection (3) insert— 
 (4) For the purposes of subsection (3), the amount of duty in respect of each individual bet-taker in an accounting period shall be 15 per cent of the bet-taker's net stake receipts for that period. 
 (5) Where there is any doubt as to which of two persons is the bettor and which the bet-taker for the purposes of subsection (1)(a), whichever of the two was the first to use the facilities of the operator to offer the bet shall be treated as the bet-taker.'.
 Amendment No. 130, in 
clause 7, page 5, leave out line 26. 
 To save the hon. Member for Spelthorne (Mr. Wilshire) some embarrassment, hon. Gentlemen may remove their jackets.

David Wilshire: On a point of order, Mr. McWilliam. I was told this morning by the lead Chairman that we had his permission to remove our jackets. However, if his strictures are not carried forward to you, I grovel unreservedly.

John McWilliam: The hon. Member does not have to grovel. The standing order applies to each sitting individually.

John Healey: May I welcome you to the Chair, Mr. McWilliam, for this afternoon's sitting? I have no doubt that you will be no less fair and no less firm than Sir Nicholas made it clear he intended to be this morning. I look forward to serving under your chairmanship alongside your co-Chairmen.
 With my last breath before sitting down, I was on the last line of my response to my hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth) when I took an intervention from him. He asked whether the majority of betting exchange customers are recreational users and whether the majority of exchange business is recreational. The figures that we have come from commercial companies, so the precise details are confidential. However, I can confirm that the vast majority of betting exchange customers are recreational users, and they account for the vast majority of betting exchange business. I hope that that is helpful. 
 My hon. Friend's amendments Nos. 126 to 130 would change fundamentally the reform proposed in the Bill, and the exchanges would retain their current volatility. Therefore, I hope that my hon. Friend will consider withdrawing his amendment.

George Howarth: I welcome you to the Chair, Mr. McWilliam. I know that you have many years' experience of chairing these Committees and that will stand us in good stead.
 I shall be brief because we have had a good, detailed and wide-ranging discussion that covered a topic that would not otherwise have been debated. 
 I notice that the hon. Member for East Carmarthen and Dinefwr (Adam Price) has not made it back to the Committee, but he intervened on me to ask about the relationship between betting exchanges and racing. I understand that it was presumed that the levy for the current year would be around £92 million, but the latest estimate has declined to £75 million, so there is a discrepancy as a direct result of people transferring business to betting exchanges. Racing will suffer proportionately because most of that money, if not all, is used to support racing. I wanted to put the record straight. 
 Turning to the substantial matter, the key issue between my hon. Friend the Economic Secretary and I is the market. We have different views on who participates in betting exchanges and what is happening—where the money is coming from and where it is going. 
 I think that my hon. Friend used the term ''leisure participants''. He certainly referred to people becoming involved in betting exchanges in pursuit of a leisure activity. Another way of putting that is punter 
 to punter. The problem with that analysis is that it is difficult to know whether that is so, because in reality it is stranger to stranger. The person laying the bet is unknown to the person taking the bet, and there is some doubt about what is going on. 
 My hon. Friend justifiably pointed out that, because of the Chancellor's changes, many bookmakers who had located themselves offshore had come back onshore. He said that that was welcome, as indeed it is. The danger now is that foreign layers could use—I suspect that they are using—the betting exchanges because they have an unfair advantage over UK bookmakers. If that assumption is correct, in the longer term one of two things will happen—or both. Either regulated UK bookmaking business will decline or there will be more and more offshore activity, the very thing that the Chancellor tried to avoid. 
 Since our sitting this morning I have been informed, although I have not spoken to it directly, that the Tote is concerned about the provision and supports the arguments that I put this morning. Therefore, the argument is finding wider favour, certainly among the bookmaking community. 
 My hon. Friend asked me to consider seeking to withdraw the amendment. As he is aware, I have always been prepared to do that. However, because there is a disagreement between us about exactly who is involved, I ask him to meet our leading bookmakers before the Bill completes all its stages, to see whether their version of what is going on can be squared with his. If he undertakes to do that, I should be more than happy to seek to withdraw the amendment. 
John Healey indicated assent.

George Howarth: I see by the nod of his head that my hon. Friend signifies his agreement to do that. With those assurances, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

John Healey: I beg to move amendment No. 102, in
clause 7, page 5, line 28, after first 'in', insert 'paragraph (a) of'.
 As my hon. Friend the Member for Knowsley, North and Sefton, East said, we had a full and wide-ranging debate on his set of amendments. 
 The context of amendment No. 102 is clearly our recent evaluation of the gross profits and tax on betting and the submissions that we have received from the industry as part of that evaluation. The amendment is to the part of the clause that puts in place the change in the way in which betting exchanges are taxed. 
 It became clear from studying the changes that the law requires further clarification. The clause was intended to remove betting exchanges from the provisions of the existing law relating to bet brokers, and to change the basis on which their liability is calculated to a general betting duty. That required, among other things, an amendment to section 5C(1)(a) of the Betting and Gaming Duties Act 1981, but the clause could be interpreted as requiring an amendment 
 also to section 5C(1)(b), which is not the intention of the reform. Amendment No. 102 was prompted by questions from the trade, which pointed out that the clause could be interpreted as needing an additional and unnecessary amendment to the law. 
 More broadly, I understand why mainstream bookmakers wanted us to adopt a different system, but, despite a tripling of the tax rate for betting exchanges—taken as a percentage of commission, exchanges have had a tax rate of around 5 per cent. during the 12 months of the new regime—the change has been welcomed by exchange operators. Mark Davies of Betfair, one of the market leaders, has said that his company 
''have consistently argued that a gross profits tax should be charged on the basis of a company's gross profits, and Betfair makes its money by charging its customers a commission that is stated up-front.''
 With those remarks, I hope that the amendment will be welcomed on both sides of the Committee. I commend it to Members.

Stephen O'Brien: May I welcome you to the Chair, Mr. McWilliam, in your role as co-Chairman of the Committee? First, I seek your guidance. As we have had a wide-ranging debate on the amendments, and knowing that Chairmen generally consider whether that can eliminate a stand part debate, can I ask whether you are thinking about doing that? If so, may I just introduce one idea now on which I had hoped the Government might table an amendment?

John McWilliam: It is extremely difficult for me to take that view because I was in the middle of taking advice. However, it seems to me that the amendments pretty well cover the clause anyway, and my instinct is to do just that. I suggest to the hon. Gentleman that if he wants to go wide, and treat this as a clause stand part debate, that is probably in the interests of the Committee as a whole.

Stephen O'Brien: I am grateful, Mr. McWilliam. That entirely accords with the determination that I had hoped you would make.
 My party supports the Government amendment and raises no objections to it. It is clearly a sensible tidying-up. My point, which is brief, relates more to a stand part debate because it is on something that we hoped would be included in a Government amendment, but does not appear. I do not find it clear from the drafting of the Bill what the consequences will be if a provider provides both a betting exchange and premises. I understand that in the case of premises exclusively, the service involved is better understood; but it would be helpful if the Minister could clarify what happens if there is joint provision. Why have the Government not thought fit to introduce a further amendment on that? 
 That aside, we are happy with the current Government amendment.

John Healey: Perhaps the hon. Gentleman will allow me to write to him on that narrow point.

John McWilliam: I call Mr. Jack.
Mr. Michael Jack (Fylde) rose—

John McWilliam: Order. The Chair may have seemed a little prescient there, but I was worried about the right hon. Gentleman getting back in time.

Michael Jack: I welcome you to the Chair, Mr. McWilliam. Thank you very much for your kind consideration.
 I may have missed something, but perhaps the Economic Secretary could explain to me, before he closes his notes on it, precisely how the amendment works. Unless something is missing, or it leads to some greater mystery, I cannot see, having examined line 28, how the amendment fits into it. Can he explain how it will work and rather more precisely what it means? If after the word ''in'' we inserted ''paragraph (a) of'', which is on the amendment paper, we would then have the words 
''of the course of a business''.
 I do not understand that.

John Healey: My belief is that the amendment works perfectly adequately, but I shall have a look at it. If I change my view on that—

John McWilliam: Order. I think that we are getting our ''in''s mixed up—or perhaps we visited some at lunch time, I have no idea. Perhaps the right hon. Gentleman should read from the first ''in''. I can understand it, and I am not that clever.

Michael Jack: I think that I have got the wrong ''in'', Mr. McWilliam. Let us say that I shall be out, and thank you very much.
 Amendment agreed to. 
 Clause 7, as amended, ordered to stand part of the Bill.

Clause 8 - General betting duty: restriction of exemption for on-course bets

Question proposed, That the clause stand part of the Bill.

John Healey: On-course betting was taken out of the scope of general betting duty in 1987. The intention was to promote a healthy betting market at race courses and greyhound tracks, which is an important factor in generating the starting prices for horse races and greyhound races. The starting prices are used to determine the odds in high street bookmakers up and down the country.
 That concession was welcome, well-judged and well-targeted. In recent years, however, the on-course exemption has increasingly been used at other sporting venues where betting is not the main source of attraction and where no comparable starting price mechanism is at work. Members of the Committee will probably be aware that bookmakers are based in stalls within most football grounds, golf tournaments and cricket grounds, and it does not make sense for them to benefit from the same on-course exemption. 
 We signalled our intention to review the scope of the on-course exemption when we introduced the gross profits tax in 2001 and we have consulted extensively 
 since then. We have received no responses to the consultation supporting the continuation of current arrangements. By restricting the on-course exemption to bets made on horse racing and greyhound racing, we are restoring and strengthening the rationale behind the original concession. We are satisfied that the measure will have little adverse impact on the ability of bookmakers at other sporting venues to continue to flourish and I stress that it will have no impact on punters, who will continue to be able to enjoy tax-free betting at those venues.

John Baron: I, too, welcome you to the Chair, Mr. McWilliam. Although I accept the Economic Secretary's remarks, the choice of sports to benefit from the exemption is unfair. The clause amends the definition of an ''on-course bet''. As I understand it, from 1 September 2003 the on-course exemption to betting duty will apply only to bets made at horse and dog race meetings.
 Because of the actions of both Labour and Conservative Governments over the years, Britain has been a world leader in the global betting market and the online betting revolution. I pay tribute to the Government for abolishing the betting tax in October 2001. Going back even further, the Economic Secretary rightly pointed out that in 1987 on-course betting was taken out of the scope of general betting duty. As he said, the intention was to promote a healthy on-course betting market for horse and greyhound racing, which importantly supports the industry's starting price mechanism. 
 The Committee has heard that the provisions have been increasingly used at other venues, such as football grounds, rugby grounds, golf courses and so forth. At this point, I should declare a partial interest: like many others, one of my great pleasures is watching rugby, particularly England at Twickenham, and having the occasional beer as well. Although I do not partake, I have friends who like to bet on the outcome of the match. It appears that the Government are not prepared to accept that on-course bookmakers at events, such as rugby matches and games of football, should be treated in the same way as those at horse races or greyhound meetings. 
 I accept that the starting price mechanism is crucial in horse racing, but starting prices also apply to football matches and rugby matches. The nature of betting has moved on because one can bet in a variety of ways on not only the outcome but the spread of points. It seems unjust that those going to rugby matches, for example, should be discriminated against and, at the end of the day, poor tax law results in costs being passed on to consumers. 
 I would also ask the Economic Secretary one other question. What assessment has he made of the impact that the clause will have on the odds offered by the bookmakers? I should be interested to hear whether any analysis of that has been carried out by the Treasury.

Michael Jack: I add to what my hon. Friend has just said one further question. Why would the measure apply at a grand prix horse meeting but not at a grand prix motor race? There are examples of on-course
 betting arrangements at the latter, and I am struggling to understand why animals should benefit, while human activity is discriminated against.

Rob Marris: I welcome you to the Chair this afternoon, Mr. McWilliam. Another jewel in the crown of my constituency is Molineux football ground, home to Wolverhampton Wanderers football club which, as I am sure many hon. Members will know, had a wonderful result last night at Reading and is going into the play-offs for the premier league. If the team should not get promoted, I am concerned what the financial impact of this change might be on Wolverhampton Wanderers football club.

John McWilliam: Order. If the hon. Gentleman is suggesting that the Finance Bill should contain legislation that would require that result, I have to tell him that I would have to be impartial.

Rob Marris: I would welcome any amendment to that effect, Mr. McWilliam. If Wolverhampton Wanderers was not to be promoted, it would stay in the English league division one, in which there are significant financial difficulties due to the ITV Digital fiasco. I wonder if the Minister would tell me what effect the clause would have on the finances of football clubs that may be leasing out betting space to a private company for at-stadium betting, whether on the result of the match taking place at that stadium, other football matches or other sporting events. Has the Treasury made an assessment of the financial impact?

Stephen O'Brien: I have listened carefully to the Minister and the contributions of my hon. Friends, as well as to the hon. Member for Wolverhampton, South-West (Rob Marris), and it seems to me that while I accept the Minister's logic, questions have to be raised—of course, it would be very helpful to have the answers too. I am very interested to hear the answer to the question put by my right hon. Friend the Member for Fylde (Mr. Jack) about motor racing. Oulton Park circuit is in my constituency and it is having to go through some major restructuring, so obviously the financial implications are important.
 Most of us will have some form of constituency interest which might experience a potential differential or even competitive effect in relation to the future financial backing that can be found to underpin various sporting venues. It did strike me that one of the most difficult ones to square—it may seem somewhat humorous—was a donkey derby because that really is entirely animal-based. Is a donkey a horse for the purposes of the clause? I do not know whether the Economic Secretary has paragraphs of advice helpfully provided by his officials, but I dare say that the world has always wished to know the answer to that. Is he able to provide it this afternoon? That would be a world first. I say that in the presence of my right hon. Friend, who represents Fylde, which is close to one of the most famous donkey derbies on the Blackpool beach. We need to know the answer, but on the basis that we will get satisfactory answers, we will be happy to support the Government on the clause.

John Healey: I shall respond to the points raised by the right hon. Member and other hon. Members. The rationale for returning the concession to its original purpose is twofold. First, at venues such as rugby grounds and motor racing circuits, betting is not a major part of the attraction in the way that it is in horse racing or greyhound racing. More importantly, as I explained in my opening remarks, at greyhound tracks and horse racing circuits, on-course betting is a crucial component in establishing, altering and determining the starting prices for those races. That simply is not comparable with the sort of prices that someone would get on the result at a football or rugby match, or any other sort of sporting fixture where the prices are determined by off-course bookmakers.
 A couple of hon. Members were concerned about the impact of the change. As a result of the consultation and the accompanying discussions and evidence, we are satisfied that there will be little adverse impact on the ability of bookmakers to conduct their business activities at sporting venues that will no longer be covered by the concession. There was absolutely no indication from the bookmakers during the consultation period that they would withdraw from those venues as a result. We, therefore, confidently believe that there will be very little or nil adverse impact on the venues at which the bookmakers choose to continue to operate. As far as we can estimate, the impact of the reform on the odds that may be offered will also be negligible.

Tony Cunningham: From what I can gather, the Economic Secretary is talking about horse racing and greyhound racing. I just wondered whether hound trailing, which is popular in my constituency and other parts of Cumbria and which has on-course betting that determines the price, is also covered by the amendment.

John Healey: I have to concede that I am not familiar with that sport. We do not have it in Rotherham. If I may, I will check the point and get back to my hon. Friend.

Stephen O'Brien: Will the Economic Secretary ensure that the letter is sent to all members of the Committee? As a Cumbrian by background, I am familiar with the sport. It was a good example and I am grateful to the hon. Member for Workington (Tony Cunningham) for raising it.

John Healey: I should be delighted to do that. I am not promising or making any commitment, but if I can shed any light on the philosophical question posed by the hon. Gentleman about when a horse is a horse and not a donkey, I will do so as well.

John McWilliam: Order. That is more a zoological question than a philosophical one.
 Question put and agreed to. 
 Clause 8 ordered to stand part of the Bill.

Clause 10 - Amusement machines not operated by coins or tokens

Question proposed, That the clause stand part of the Bill.

John Healey: The Government's White Paper ''A Safe Bet for Success'' proposed a relaxation of the current restrictions on the use of certain payment methods for playing machines. By the summer of this year it is expected that players will be able to play jackpot machines using smartcards and notes. Other machines will benefit from the changes early next year. The clause ensures that any dutiable amusement or gaming machine remains liable to that duty even when it accepts payment through methods other than coins or tokens. There is a possibility that machine operators may take advantage of the current legislative definitions of payment methods, such as coins or tokens, to argue that machines accepting payment other than in coins or tokens are not subject to duty. The clause ensures that that loophole is closed. It is an administrative change only. It does not place any burdens on business or consumers. I commend it to the Committee.

Stephen O'Brien: Given the guidance, I just want to raise a small point. In the interest of time, it will not necessarily mean that the Economic Secretary has to open the whole issue up to drill down to the fine detail. I just want to establish why there is a different structure for the definition of 50p machines, compared with 2p, 5p and 10p machines. It is no more than that. Otherwise, we are happy to support the Government.

John Healey: I have not given that detail of this provision as much scrutiny as the hon. Gentleman. I am prepared to answer the question whenever I can. The reason, I understand, is that rates of amusement machine licence duty are set in those bands.
 Question put and agreed to. 
 Clause 10 ordered to stand part of the Bill.

Clause 11 - Amusement machines: use of currencies other than sterling

Question proposed, That the clause stand part of the Bill.

Stephen O'Brien: We note that under new section 26A(3) references to sterling will include references to the equivalent amount in other currencies on Royal Assent, and that the date when the licence is granted rather than when the application is received is the applicable date. It would be helpful if the Minister could clarify the difference between the date when the licence was granted and the date when the application was received. If it is a matter of writing a letter, that will be more than satisfactory.

Jonathan Djanogly: I also have a small point. In relation to currencies other than sterling, new section 26A(2) says that the exchange rate
''shall be determined by reference to the London closing exchange rate for the previous day.''
 Can the Minister advise us whether that is defined elsewhere in the 1981 Act? If it is not, whatever it is that constitutes the exchange rate should be defined.

John Healey: Like clause 10, the clause flows from our proposed relaxation of the use of certain payment methods for play machines, following the recommendations in the White Paper, ''A Safe Bet for Success''. Therefore, in future, as well as using sterling coins and tokens, it will be possible to use bank notes, so it may be possible to use foreign currencies for play machines in the UK. The clause ensures that any dutiable amusement or gaming machine remains liable to that duty, even when it accepts payments in foreign currencies. That closes a possible loophole in the current legislation.
 The hon. Member for Eddisbury (Mr. O'Brien) asked about the date on which the provision comes into effect. The date will be when the application is received. I hope that that clarification is helpful. 
 Like clause 10, the clause makes an administrative change only and does not place any burdens on business or consumers. 
 The definition is as the hon. Member for Huntingdon (Mr. Djanogly) read out. The rate is the closing price on the London market on the day prior to the day when the application is received. I hope that that helps him.

Jonathan Djanogly: What London market is referred to? Is it the London inter-bank rates or Barclays bank's rates?

John Healey: That is an interesting, and slightly esoteric, point, but I understand why the hon. Gentleman makes it, because we want to be as precise as we can. As I said earlier, these are essentially technical and administrative changes, which we are putting in place in anticipation of deregulation, so that amusement machines can operate more effectively in future.
 I shall write to the hon. Gentleman to answer his detailed points. I shall type the letter to make it extremely clear and very readable, and I hope that that will satisfy him. 
 Question put and agreed to. 
 Clause 11 ordered to stand part of the Bill. 
 Clauses 12 to 15 ordered to stand part of the Bill.

Clause 16 - Duty at higher rate: exception for tractive units

Question proposed, That the clause stand part of the Bill.

Stephen O'Brien: We have moved from betting and gaming to vehicle excise duty. We have passed through clause 15 on Northern Ireland and reached clause 16. The clause provides that an articulated lorry is not chargeable at the higher tax rate if used with fewer axles than when licensed. Provided that actual weight, rather than plated weight or design weight, is used to determine the tax rate, the vehicle will not fall into a higher tax band than when licensed. That will take effect from 9 April.
 I am sure that the Economic Secretary will be as aware of that matter as I am. He will not be surprised that I have been made aware of it by the Freight Transport Association, not least because it has been 
 instrumental—and successful—in making representations on the matter. I generally support the clause, but there is useful background material, and I shall place just some of that history on the record. 
 I am grateful to the Freight Transport Association for having ensured that the provision is well understood. That is important because, as a constituency Member, I have had many cases on it. I dare say that that is the case with Members across the Room, and I see one of my neighbouring Members of Parliament from across the border in Wales in his place, the hon. Member for Wrexham (Ian Lucas). He is aware that there are many trunk roads in our part of the world, but not that many motorways. Since the introduction of the 44-tonne limit, an increase under European law, the question of axle weight has become key. 
 Axle weight is causing concern because, clearly, lorries can now be larger. Many of our roads were built after houses were already there, which had been built when the road was a track. There is much grave danger. People have recognised the importance of axle weight as they have come to understand the cost to the Exchequer and to local councils and highways authorities. These heavy lorries are, unquestionably, the greatest determinant of road maintenance costs. With the company for which I used to work, I used to be the leading supplier of aggregates in the FTSE 100, so that situation was very advantageous to us; but it is very poor in terms of the competitive economy of the nation. 
 The change that the clause contains will protect operators from prosecution if they opt for the flexibility provided by the seven bands of vehicle excise duty introduced in the 2001 Budget. There is a slight history to that, which is building up. I agree with the Freight Transport Association that the change is sensible and will prevent articulated vehicle operators from being prosecuted because of the previous somewhat ambiguous legislation. That is not intended as a criticism; this is a sensible tidying-up. It will also avoid extra administration for the Vehicle Inspectorate and the Driver and Vehicle Licensing Agency. Those costs could be quite significant, and the clause will assist to temper the administrative burdens that there would be on the public purse if operators were required to up-plate and down-plate vehicles according to their circumstances. 
 It would be gilding the lily to go through the history from 2001—those who wish to know more can always look it up—but the new vehicle excise system introduced that year gave operators of articulated vehicles the choice of seven taxation bands. The main thing to recognise is that as a result of the sensible and determined representations of the FTA, among others, the Treasury has included in the clause an addition that is helpful in relation to the Vehicle Excise and Registration Act 1994. It confirms the flexibility for articulated vehicles to operate at maximum weights with trailers that have fewer axles without attracting a higher rate of duty. 
 I hope that all that is not as clear as mud. It is enormously important to recognise changes in road usage, even if they may be somewhat unwelcome. It is a fact that weights have been allowed to increase, thereby putting trunk roads under much more pressure. The more we can do to reduce the administrative costs of up-plating and down-plating for such vehicles, the better for all of us.

John Healey: I welcome the hon. Gentleman's welcome for the clause. He recognises the work of the FTA , which I am happy to confirm was helpful and influential.
 The clause is intended to clarify the system of vehicle excise duty for lorries that we introduced in December 2001, which greatly simplified the structure of taxation for lorries by replacing more than 100 separate tax rates with seven tax bands that reflected the road wear and environmental impact of different types of lorries. In particular, it was intended to allow greater flexibility to operate a lorry at a variety of weight and axle configurations without the need to re-plate or re-licence it. That significantly reduced red tape for the industry and was greatly welcomed at the time. 
 The flexibility in the new structure for VED for goods vehicles relied on section 15 of the 1994 Act, which states that a vehicle becomes liable to VED at a higher rate when it is used in such a way as to render it liable to tax at a higher rate. Thus, a vehicle could be used at any weight or axle combination that rendered it liable to taxation at the same or a lower rate. 
 However, we became aware of a potential conflict between that interpretation and clause 60A of the Act, which states that the rate of tax at which a licence is issued is determined by the plated weight of the vehicle; in other words, the maximum weight at which a vehicle is permitted to operate. It became clear that there was a risk that operators who took advantage of the greater flexibility that we intended might leave themselves open to challenge and prosecution. 
 The aim of the clause is to resolve that conflict and make it clear that once a vehicle is licensed and on the road, it is the actual weight, not the theoretical maximum weight, of the vehicle that determines the tax liability, in line with the policy that we announced in 2001.

Rob Marris: I am grateful for the change, as someone who used to drive such vehicles. Can my hon. Friend tell me whether it will be easier or harder for the police to enforce the law when they stop a vehicle, in terms of having to weigh it rather than refer to its plated weight?

John Healey: We have not yet encountered significant enforcement problems in the operation of the new regime, and I do not anticipate that the clause will change that. Clearly, I must stop pausing for breath before I say my final sentence. On that basis, I hope that the Committee will support the clause.
 Question put and agreed to. 
 Clause 16 ordered to stand part of the Bill.

Clause 17 - Requirement of evidence or security

Stephen O'Brien: I beg to move amendment No. 84, in
clause 17, page 15, line 28, leave out subsections (4) and (5).

John McWilliam: With this it will be convenient to discuss the following:
 Amendment: No. 1, in 
clause 17, page 15, line 42, at end insert— 
 '(6) If the Commissioners enforce their security to secure payment of any VAT that is due from a person other than the taxable person, the taxable person may recover the amount of that VAT from that other person.'.
 Amendment No. 85, 
in clause 17, page 16, line 6, leave out subsection (7).

Stephen O'Brien: Having moved so rapidly, we come now to VAT. I think it is only fair to say that that subject will need to be considered in a little more detail, because there are a number of points to be made.
 I shall be economical in introducing the amendments, and it may be helpful if I deal with amendment No. 1 first, and then amendments Nos. 84 and 85. The clause is intended to enable Customs and Excise to require the deposit of a security from a business involved in the VAT supply chain, the operation of which places the revenue at risk. That provision is intended to come into effect on 10 April, and it also includes a provision for Customs and Excise to accept evidence, other than that contained in documents, to support a claim to deduct input tax. It is that second evidentiary point to which amendments Nos. 84 and 85 are addressed. 
 Amendment No. 1 would add a further provision. The clause raises issues of concern as to the general balance—this is an important constitutional issue, and one of general rights—between achieving the aim of protecting Customs and the revenue it is able to raise, and preserving the rights of individual taxpayers. It goes further than the existing provisions, in that it extends to supplies to the taxable person and supplies by other persons. The key point is that the clause places no limitations on Customs and Excise, as the security provisions can be invoked whenever it thinks it necessary for the protection of revenue. 
 The provisions could be onerous, particularly for newly formed businesses. It has been noticeable throughout the consideration of clauses by the whole House during the past few days that that sector of our economy has exercised hon. Members from all parties. It is an important point, and the hon. Member for Sheffield, Heeley (Ms Munn) made a very clear speech about small businesses in her constituency. The provision is particularly onerous for newly formed business. That is why we have tabled the amendments, which I hope the Economic Secretary will find appropriate and proportionate, and will accept as the solution to the problem. 
 There should be a right of recovery from third parties if VAT on supplies by them is collected through enforcement of the security. That logic 
 reflects what I believe was in the minds of the draftsmen. I do not think that we are asking for something beyond what they have contemplated, but it is not in the Bill. Very revealingly and helpfully, in that it discloses the mind of the Government and those who have sought to put their instructions into words, there is such a reference is in paragraph 1 of the explanatory notes on the clause: 
''This clause extends the powers that Customs and Excise currently have to require the provision of security where it is considered that a business is associated with other businesses whose pattern of trading poses a real threat to the proper collection of VAT.''
 The reference to associated businesses in the explanatory notes should be reflected in the clause. That does not seem to be asking too much or doing anything other than making the clause clear. 
 Amendment No. 1 would also ensure that there are limitations to the circumstances in which the provisions can be applied. It is not as though I am raising this point for the sake of it. I have received representations on the matter from the most respected institutions. Those bodies take a deep interest in such affairs, and have a wide collective client base, which is aware of what the measure means on the ground. The Institute of Chartered Accountants in England and Wales, the Chartered Institute of Taxation and the Institute of Indirect Taxation have all written in stronger terms than I have used to the Economic Secretary and in the amendments. Some of those bodies would have had the clause struck from the Bill on the basis that it represents a serious potential problem. 
 For the sake of the Committee's efficiency, I shall refrain from reading out the Law Society's long brief, which I commend to those who are concerned about the matter. As Members of Parliament, we are all concerned to protect the interests of our constituents as citizens and taxpayers, which is part of our duty in examining all provisions in legislation proposed by Governments of all colours. It is also obviously our duty to examine the Government's proposals in order to protect the revenue that they can raise. 
 Subsection (2) broadens the powers of Customs of Excise to require the production of documents ''or other information'', which may give rise to unreasonable, irrelevant or inappropriate requests for information that have no direct bearing on the transaction with which the inquiry is concerned. 
 Amendment No. 1 addresses the important point about an appropriate, proportionate and fair settlement. Above all, we should seek to enshrine in statute a sense of justice on which taxpayers, citizens and constituents can properly rely without concern and doubt that there may be a clause that enables Customs and Excise to act inappropriately—I am not suggesting that it will. The taxpayer should not be subject to the enormous concern, worry and expense of having to prove their position in the civil courts at a cost risk. Putting a benchmark in statute would set the standard that we expect, which is why amendment No. 1 seeks to address that point. 
 If, much against my hope and expectations, the Government are not minded to accept the amendment, 
 given that the group of amendments clearly and sensibly relates to one clause, I shall seek recognition that amendment No. 1 deals with a slightly separate point from amendments Nos. 84 and 85. Under your guidance, Mr. McWilliam, I may want to vote separately on amendment No. 1 and to take amendments Nos. 84 and 85 together. 
 The next problem with the clause is the requirement for evidence and security. The issues on subsections (2) and (3) are not very different from those in the existing provisions. I want to make it clear that the clause has been genuinely thought through and filleted to establish where the problem lies. I do not seek to amend subsections (2) and (3), which are part of the intended tightening up by Her Majesty's Customs and Excise of input VAT refunds to traders who do not hold VAT invoices. That is made clear in the consultation paper ''VAT Strategy: Input tax deduction without a valid VAT invoice'', which was published in April 2003. Customs and Excise intends to be tougher on computers and associated equipment, telephones and associated equipment, alcohol and road fuel rather than on other goods and services, which is not objectionable. 
 Subsections (4), (5), (6) and (7) are an entirely different matter and give rise to real concerns. In addition to the concerns that we have outlined, which we have sought to address through amendment No. 1, there are the problems addressed by amendments Nos. 84 and 85. 
 Ever since VAT was introduced, Her Majesty's Customs and Excise has had the right to demand security from a supplier for his future output VAT liabilities—he has a limited right of appeal against that—or in case input of VAT refunds are incorrectly made to him. The security is normally a cash deposit or bank guarantee. 
 I sought with sleepless effort to distil the serious issue contained in the pages of representations that I have received, but I thought it might be easier for hon. Members to follow my argument if I referred to parties A, B and C. For those who like drawing diagrams, this may be the moment. The new provisions state that if A makes supplies to B and B makes supplies to C, B can be required to give security not only for any VAT that becomes due from him to Customs and Excise, but for any VAT that becomes due from A or C. There is no restriction to goods or services of any particular sort. Customs and Excise must show under subsection (7) that there has been or is likely to be some evasion or attempted evasion of VAT in relation to some goods or services supplied to or by B. That might have been at any time in the past, it might have been trivial and it might not have been by B. Enforcement of the security is not restricted to VAT on supplies when there has been or is likely to be evasion. 
 That is extraordinarily widely drafted and could impose a crippling—I am not using the word lightly—obligation on small businesses for VAT liabilities that are essentially not their own. The provisions should be deleted. Under existing legislation, Customs and Excise can demand security from A or C for their 
 own output VAT liabilities. If A or C find it difficult to come up with that security, B can help them out if he believes that it is in his commercial interest to do so. That is why our amendments Nos. 84 and 85 would omit subsections (4), (5) and (7). 
 I have done my best to explain the issue clearly in a complex but important area involving taxpayers' rights versus the state's interests. We could be discussing a more fundamental interface of the interests and duties that we, as Members of Parliament, must tackle.

Rob Marris: Does the hon. Gentleman share my surprise that in new section 77A there is a knowledge test, but clause 17(7) to which amendment No. 85 refers contains no such knowledge test for person B?

Stephen O'Brien: I am grateful to the hon. Gentleman. He has put his finger on a fundamental issue, not least because knowledge of evasion or attempted evasion is fundamental to whether a citizen is likely to attract a penalty and difficulty. The hon. Gentleman's helpful and pithy contribution demonstrated the problem better than I could, having compared the different parts of the clause, taking it as a whole and examining the intended mischief that the Government seek to address. It is not a matter of dispute in the Committee that the Government must tackle tax evasion wherever and whenever it arises. We would support clauses that were designed and targeted to achieve that.
 The clause is extraordinarily widely drafted. There is disparity in the application of a knowledge test, and there could be a significant financial penalty and a major impact on a person's reputation, even though he has not taken the action or had the knowledge that is causing the problem. Therefore, the Government must reconsider the matter. I recognise that a great deal of work goes into these Bills and that there must be pride of authorship—I do not accuse the Minister of that. 
 I hope that the Government will accept the amendments, because the provision could create a mischief that can easily be spotted now that it is on the record, given what I have said. I hope that we will not find this debate quoted in courts around the land when it comes to costs assessments and whether it was right for Customs and Excise to be able to recover costs when it had to take somebody through the courts who had not done anything wrong and may not have had knowledge of the mischief that it was trying to prevent. Those are the issues at stake.

John McWilliam: It may be for the convenience of the Committee if I explain exactly where we are now. At the moment the only question before the Committee is amendment No. 84. If the hon. Member for Eddisbury wants to put amendments Nos. 1 and 85 separately to a vote, I shall invite him to move them formally at the appropriate time. However, if the amendments essentially eat the clause, and they do, it is my view that we are having a clause stand part debate at the same time.

David Laws: Welcome to the Committee, Mr. McWilliam, and I welcome your guidance on the debate. It is extremely useful and will
 allow us to deal with many issues at the same time and more crisply than would otherwise be possible.
 We support the argument developed very effectively by the hon. Member for Eddisbury and the amendments. Clause 17 and the related clause 18 seem to have been two of the most controversial in the Bill and are probably two of the more controversial clauses that we shall debate. The hon. Gentleman was correct to say that there has been widespread criticism of them—I shall try to focus on clause 17, as that is the one before us—which has ranged across the principal bodies with expertise in tax matters, including the Law Society, the Institute of Indirect Taxation, the Institute of Chartered Accountants and the Chartered Institute of Taxation. All those bodies have been extremely critical of the way in which clauses 17 and 18 have been drafted and all have made points that appear to underpin the hon. Gentleman's arguments. 
 The background is well understood by all members of the Committee, who understand that the Government are concerned about the loss of large amounts of indirect tax revenue—possibly billions of pounds a year—and are responding by closing some loopholes used to evade tax that could be used to cut tax burdens on business or to invest in public services. Therefore, this is clearly an important issue. 
 We also understand why the Treasury wants to draw the clauses as widely as it has, as such a body would always do. It enables it to catch many types of offences without having to come back in one Finance Bill after another to introduce increasingly tough measures, as has happened in some areas of tax evasion. This time, the Treasury seems to seek to catch a whole area of evasion in one go, but in doing so, it is asking us to trust it to administer that in a way that is safe and reliable for the interests of taxpayers. I hope that the Economic Secretary will not mind my saying that businesses across the country and Members on this side are concerned about giving the Treasury powers to the extent that it seems to seek in this and other clauses—the power to make judgments itself on whether businesses have acted reasonably in particular cases. 
 I draw the Economic Secretary's attention to much of the evidence provided and many of the points made by the leading tax advisory groups, and to the issues that the hon. Member for Eddisbury picked out so well in his discussion of the amendments. The Institute of Chartered Accountants has distributed an analysis on clause 17 to us all. It has drawn serious concerns to public attention. The first is the potential for some of the measures to apply to businesses that are innocent as well as to those that are clearly guilty and need to be dealt with. The second is that, as the hon. Gentleman said, there do not appear to be adequate safeguards for many of the businesses that could fall into that category. Many would undoubtedly be smaller businesses, those just getting off the ground, perhaps with shaky finances, or those in a fragile position that could fall victim to some of the measures proposed in the clause. In less favourable circumstances than the economic growth of the past 10 years, a large number of businesses could be in such a position. 
 As the hon. Gentleman pointed out, another serious concern in relation to his helpful notion of the four entities, A, B, C and D, is that the Treasury is essentially asking to be able to police the entire supply chain, rather than holding businesses accountable only for the immediate transactions with which they are involved. If taken to its logical conclusion and not implemented in a sensitive way, that could in practice require some legitimate businesses to cease trading. The Institute of Chartered Accountants sums that up well when it says: 
''The legislation should be properly targeted and not drafted so widely that it applies to innocent taxpayers. It is not acceptable for a wide class of taxpayers to be taxed under the law, only to be untaxed by internal safeguards within Customs which have no legal effect. Limited experience of similar, but more restricted, laws in other countries indicates that tax administrations tend to pursue the legitimate businesses in the supply chain, since these are the ones who remain after the fraud has taken place.''
 That is a well-put case and concern. 
 Not only the Instituted of Chartered Accountants, but the Institute of Indirect Taxation and the Chartered Institute of Taxation have expressed concerns on whether clause 17 is consistent with the sixth VAT directive or the Human Rights Act 1998. The Chartered Institute of Taxation has said: 
''The provisions will inevitably lead to situations whereby the VAT due from a taxpayer falls to be discharged by another person. This appears to be contrary to the express provisions of article 21(1)(a) of the Sixth VAT Directive.''
 As that concern has been fairly widely expressed, I hope that the Economic Secretary will return to it. 
 We entirely understand why the Economic Secretary is trying to frame the clauses as widely as possible. We understand the good intentions in the Treasury over trying to ensure that only businesses that have been complicit in VAT fraud should be held to account. However, we do not feel that the safeguards here are sufficient to give businesses comfort that they will not fall into a situation in which the concerns that have been expressed, and to which I have referred, will come about. 
 Perhaps I could list some of the detailed concerns, which the hon. Member for Eddisbury has already brought to our attention. Those concerns are set out by the Institute of Chartered Taxation in its paper about clause 17, and are precisely the points the hon. Gentleman raised. First, it finds it unacceptable in principle that one business could under clause 17, and clause 18 to some extent, be held liable for the actions of another in a circumstance where it cannot be proven that it is acting in collusion. We require some assurances from the Economic Secretary if we are to contemplate supporting the clause. 
 The second salient concern is that the clause appears to apply whether business is required to provide the security, or was aware of the existence of the other potentially fraudulent business. The provision is likely to bear down hardest, as the hon. Member for Eddisbury mentioned, on smaller businesses, which in many cases will be able to provide a security from their own resources. There are some very serious concerns, and we are worried that the Treasury, in trying legitimately to close a loophole that means the loss of an enormous amount 
 of tax revenue, is going over the top. We urge the Economic Secretary to balance the desire to ensure that we do not lose excessive amounts of revenue to tax evasion with the requirement that tax law should deal fairly with all entities and should not bring in a significant area of injustice for some businesses in order to police those who are acting in a responsible way outside the law.

Jonathan Djanogly: My hon. Friend the Member for Eddisbury said at the outset that there was a series of complicated issues, but he explained the position extremely well and made it sound relatively straightforward. At base, it is a question of rights. There is always a balance of rights to be considered between authorities and individual taxpayers, and my hon. Friend made an excellent case in saying that, in this situation, the balance is much too onerous on the taxpayer.
 The provisions go well beyond the concept of giving people security for their own liabilities. We are talking about one person being made to suffer because of the wrongs of another, whether or not the first person has done anything wrong, and in some cases, whether or not he knows what went wrong with the other person. That seems onerous in the extreme.

[Mr. Mark Hendrick in the Chair]
 Have the Government reviewed the matter from the point of view of compliance with human rights legislation? I appreciate that that has been stamped on the front of the Bill, but I can only imagine that in respect of the clause there must have been some debate about the issue; I hope that there was. If the Minister would explain the Government's thought processes, I would be grateful. I support the proposal introduced by my hon. Friend that it is only fair that the unfairly penalised person should have the ability to claim recourse through the courts for the wrong done to him or her.

Michael Jack: Thank you for calling me, Mr. Hendrick, and I welcome to the Chair.[Mr. John McWilliam in the Chair]

[Mr. John McWilliam in the Chair]
 I am still trying to cope with the enormity of the canvas covered by the clause and the amendments tabled by my hon. Friend the Member for Eddisbury. I would like to follow the very sage observations of the hon. Member for Yeovil by saying that we would not be debating the amendments before us if we had not had a range of representations of concern about the practical operations of the clause. I find regrettable, particularly in respect of the notes on clauses, the lack of what I call the real-world dimension. We all understand that there are practices of a commercial nature by which people seek to avoid paying their just desserts as far as VAT is concerned. However, the tenor of the representations that members of the Committee have received indicates that Customs appears to have taken a disproportionate approach in the exercise of some pretty onerous powers. Subsection (3) states: 
''If they think it necessary for the protection of the revenue, the Commissioners may require, as a condition of making any VAT credit, the giving of such security for the amount of the payment as appears to them appropriate.''
 Those are extremely wide powers that enable Customs and Excise seemingly to make judgments without challenge. In that context, my hon. Friend the Member for Eddisbury was right to challenge large parts of the clause, which deal with the way in which things operate, as a way of probing and seeking further protection for the VAT payer. 
 Interestingly, in the press notice about the matter there is some indication that a warning is supposed to be given to a trader who may be trading with somebody who is about to default on their VAT requirement, but there is no mention in the Bill of any kind of warning being legally required. I struggle to see how traders in a linked chain would necessarily have the prescient knowledge about what was happening. In the United States, there would have been many companies trading with Enron who thought that they were dealing with a copper-bottomed outfit. Little did they know just how quickly that seemingly impregnable financial edifice was going to collapse in reality. I venture to suggest that other legitimate traders in the United Kingdom might be in a similar position if somebody they were trading with was about to go out of business.

Jonathan Djanogly: My right hon. Friend mentioned traders having knowledge. I think that under the provisions of the clause—the Economic Secretary may wish to clarify this—that knowledge would not necessarily be required at all.

Michael Jack: I take my hon. Friend's point. One of the points made by the Institute of Indirect Taxation, to which the hon. Member for Yeovil (Mr. Laws) referred, is that it is not necessarily a question of whether a company might be illegally conducting its activities; there may be a judgment as to its commercial solvency.
 I should be grateful if the Economic Secretary would comment on what is almost insider dealing. Customs and Excise has privileged access to a company and its books and could form a view from that standpoint. Quite clearly, somebody trading with that company might not be in that position. I would be interested to know whether, in the operation of the clause and the formation of views by Customs and Excise, there is an absolute guarantee that it will not also be fed information about companies from other sources such as, principally, the Inland Revenue and members of the security forces. Where are the Chinese walls for protection? People could go on fishing expeditions to find out bits of information to make demands on legitimate traders for deposits against the anticipation that something in company A is going to happen, visiting all that, unknowingly, on company B simply because Customs and Excise has access to a vast amount of potentially privileged information.

Stephen O'Brien: Without having to cite cases, which I could not do from memory, I am sure that my right hon. Friend is as aware as I am that the courts have
 found that it is the right legal precedent to consider what Parliament intended when there is an accusation that Customs and Excise or the Inland Revenue, or any other public authority, has gone on what has been termed a fishing expedition—something that we would all find abhorrent in terms of the balance of rights between taxpayers or other citizens and public authorities. Hence the importance of the debate that we are having—our words, sentences and beliefs—and the Government's intent in relation to the legislation. As a statutory reference, that would be regarded as admissible and appropriate for a court to consider. My right hon. Friend's point was right.

Michael Jack: I am grateful to my hon. Friend for further amplifying some of the real world dangers of the powers, because all the representations that we have received address the balance between the way in which the powers will be used and the nature of the problem that they are meant to solve. When the Economic Secretary replies, he will be able to explain to us in some detail how the provision will operate in the real world and what checks and balances will be put in place to deal with the concerns that are reflected in my hon. Friend's amendments.

John Healey: The debate has been a useful one. The hon. Member for Eddisbury kicked it off in precisely the right way by recognising the importance of protecting the revenue due to the public purse and by saying that a provision such as we are examining in clause 17 requires the detailed scrutiny of the Committee.
 I shall try to deal with the points that have been made and explain my objections to the amendments, and the purpose and importance of clause 17. [Interruption.]

John McWilliam: Order. Before the hon. Gentleman gets too deeply into his remarks, can I say that I find it unacceptable that a Minister cannot get to a place because the way is blocked? I have the power to remove any civil servant from this platform and I shall not hesitate to do so if anyone has any difficulty getting past again.

John Healey: Thank you, Mr. McWilliam.
 The Government have made an unprecedented commitment to reducing the revenue losses that have historically affected the VAT system, in particular to tackling the serious problem of missing trader fraud. Missing trader fraud exploits the basic rules that allow VAT-free transactions between businesses in different European Union member states. The fraud, which has been a feature of criminal operations throughout the EU, relies on a fraudulent business buying in a large consignment of high-value, low-volume goods, such as mobile phones or computer chips, VAT-free from another member state, selling them on at a VAT-inclusive price and then disappearing without paying the VAT to the tax administration. In answer to the right hon. Member for Fylde, that is the real-world problem that we face. 
 The fraud relies heavily on the ability of fraudulent businesses to undertake trade in goods with other apparently legitimate businesses. There is no getting away from the fact that this type of business activity 
 results in massive amounts of VAT going unpaid. We believe that it is supported by businesses that perhaps turn a blind eye or, at the very least, are not sufficiently circumspect about their trading connections. 
 For several years, the VAT system in this country has been under a concerted and extremely costly attack from organised criminal groups concentrating such operations in the UK. This is deliberate tax avoidance—it is not a marginal activity that is part of a more legitimate business activity. Customs has succeeded in stopping the previously rapid growth in the scale of the fraud, but our latest estimates still put the cost to the public purse at some £1.7 billion to £2.7 billion a year. That is the real-world dimension of the problem. 
 Let me give members of the Committee some examples to illustrate the type and scale of the operations that are perpetrated as part of missing trader fraud. Last November, the director of an Irish-based company was arrested in a joint operation between British Customs and the Irish authorities for missing trader fraud involving a staggering £160 million of stolen VAT. In February, two men were sentenced to a total of 16 years and three months imprisonment for a £38 million series of VAT fraud involving the importation and onward sale of mobile telephones. That fraud involved a network of companies based in Spain, the Irish Republic and Staffordshire in the UK. One of the men was sentenced to nine years in prison, the longest sentence ever given in a case involving VAT fraud.

Paul Farrelly: I understand that some of that activity was centred on Stoke-on-Trent, which borders my constituency of Newcastle-under-Lyme. I particularly welcomed the Chancellor's commitment to regionalism in the Budget statement. Have my hon. Friend the Minister and my right hon. Friend the Paymaster General considered relocating Customs and Excise to Stoke-on-Trent, so that we could benefit from a Government Department and cut down on VAT fraud?

John Healey: Both the Inland Revenue and Customs and Excise have a strong staff presence throughout the United Kingdom and that is part and parcel of their effectiveness.
 In addition to the sentence handed down being the longest ever for VAT fraud, a solicitor was sentenced to five years for laundering £8 million of the proceeds of that fraud. The money was used for the usual purposes and activities: expensive cars, properties, yachts and so on. 
 We have had some significant successes in arresting the growth of and clamping down on missing trader fraud, but we must do more to reverse the enormous cost to the Exchequer.

Michael Jack: I am most grateful for the Minister's real-world examples. Given the prosecution's success, which he has just described, can he explain to the Committee what were the missing elements that the clause now provides to enable further stemming of the loss of VAT?

John Healey: If the hon. Gentleman will forgive me, I do not want to go any further into the details of those cases, but I will answer the general point in a moment.
 We must do more to deal with the massive criminal, organised, international VAT fraud. In addition to the extra resources that we announced in the pre-Budget report, we said that we would consider what further legislative steps could be taken to tackle the problem. The Bill takes two such steps and the provisions in clause 17 are part of that. They attack that fraud at its financial heart by targeting the supply chains for the missing trader frauds. 
 The clause ensures that if, despite warnings, a business is repeatedly engaged in transactions with other businesses whose pattern of trading suggests a high risk of revenue losses, Customs and Excise will be able to require security to be deposited on the transactions.

Rob Marris: Perhaps my hon. Friend could tell me where the phrase ''despite warnings'' appears in the Bill.

John Healey: The hon. Member for Eddisbury pointed out the significance of our proceedings this afternoon. I am in the process of explaining precisely how we will put into operation the legal provisions proposed in clause 17 and I hope and trust that my hon. Friend will take what he needs by way of reassurance from what I am in the process of saying.
 The clause revises and extends Customs and Excise's existing and well-established powers to require security payments. As at present, it will apply those powers in a way that is proportionate to the value of the tax at stake and targeted at the areas of greatest risk. I understand the concerns that businesses and advisers have made known to all members of the Committee. I understand the concern voiced by hon. Members in this debate that the powers are significant, but we are dealing with serious fraud organised on an almost unprecedented scale. The powers are necessary to attack the unprecedented loss of revenue to the public purse.

Michael Jack: Does the Minister agree that the tenor of the representations that we have received is not antagonistic to the objective that he has just described but reflects the concern that legitimate traders would find themselves caught up in disproportionate processes in a business environment in which they would not have the knowledge to be able to protect their own activities? I hope that he understands the point that I am making. Our main concern relates to the legitimate trader rather than the illegitimate trader.

John Healey: I well understand those concerns. The provision and the way in which we intend, through Customs and Excise, to put it into practice are intended to protect, wherever possible, legitimate traders. We are talking about traders who are part of a supply chain that is systematically defrauding the public purse of millions of pounds of revenue each year.

Jonathan Djanogly: I want to back up the point made by my right hon. Friend the Member for Fylde. We remain concerned about the innumerable, more legitimate traders than about the handful of fraudsters. The Minister gave one or two examples of fraud where the existing law was successful in bringing prosecutions. He has not yet given us proper examples to show the need for these powers, which everyone, including himself, is beginning to agree will prejudice legitimate traders.

John Healey: I shall give way again.

Howard Flight: No one could be keener on recovering wasted expenditure than I, but surely the hon. Member for Wolverhampton, South-West made the crucial point in terms of the law: there needs to be knowledge and warning if a democratic system is to accept the sort of powers being proposed here.

John Healey: If the hon. Gentlemen will forgive me, I shall come later to precisely these points: knowledge for the trader of doubts and concerns before action is taken, warning before action is taken and redress, if action is taken by Customs to require this extended security provision. Hon. Members will have to judge whether we got the balance right.
 We are putting in place not only powers for extended security but powers giving the tribunals extended scope to challenge the decision and actions of Customs in relation to the clause. Customs will always review any decision that may be challenged. A trader then has the right to take the decision to tribunal. That tribunal will have full appellate jurisdiction. Therefore, it will not only be able to decide whether the decision to require the security is reasonable but will have additional powers to decide to require less security or remove the security altogether. It is therefore not the case, as the hon. Member for Eddisbury asserted, that there are no limitations on Customs and Excise's powers in invoking the provisions. Those powers will be invoked only when a warning has been given. The trader will always be given a warning before the powers requiring security are used. 
 In addition, VAT-registered businesses that are known to have dealt with high-risk businesses in the past will be contacted by Customs and given advice on the steps that they should take to avoid dealing with such types of business in the future. Only if they continue to do so will Customs invoke the power to require security payments. In answer to the hon. Member for Yeovil, it cannot therefore be the case that action will be taken against a firm that is not aware of the problem with the companies and supply chain with which it is involved. 
 There are safeguards in the provision. I believe that they are sufficient, and if a business takes reasonable steps to establish the legitimacy of the business with which it is trading, the legislation should not affect it. As with clause 18, this should help to protect the competitiveness of such a business in relation to others in its industry that are cutting corners, colluding with fraudsters and not paying and operating in the way in which they should.

John Burnett: Who will act for Customs in the tribunal process? Will it be its own internal lawyers?

John Healey: I propose to go through a number of detailed points that hon. Members have raised. I shall deal with that one in the course of my remarks.
 Amendments Nos. 84 and 85 would remove our proposed new power to require the security. To that extent, they would render the clause toothless. They would allow unscrupulous individuals and businesses to continue to work together to evade tax by playing the system. Amendment No. 1 would introduce a provision for the business on which the security was enforced to recover the amount involved from the business that was first liable to pay the VAT. 
 I can tell the hon. Member for Eddisbury that there is already recourse for the recovery of debts through the civil litigation process. The person on whom the security is enforced should seek to prove a debt against the other business and gain redress through the courts in the normal way. In addition, there is no legal vires in EU law to introduce a measure such as that which he seeks. To do that in the UK would therefore be illegal. I shall urge my hon. Friends to vote against amendments Nos. 84, 85 and 1 if they are pressed. 
 On the point raised by the hon. Member for Huntingdon on compliance with human rights legislation, that statement is on the frontispiece of the Bill and we have taken a judgment that this clause is compliant. It may help him if I go a little further. The use of the measure will be compatible with human rights legislation if it occurs in appropriate cases, in a proportionate manner and with the safeguard of an appeal, at which the commissioners will have to establish on the balance of probabilities that there has been fraud evasion.

Stephen O'Brien: On the point that the Economic Secretary is seeking to address, it would be helpful to cite what the Chartered Institute of Taxation has said:
''It is difficult to reconcile the new VATA 1994 Schedule 11 paragraph 4(2) with the requirements of article 21(1) of the Sixth VAT Directive, which deals with the persons liable to pay VAT.''
 If I may crave your indulgence to quote a little further on this complicated matter, Mr. McWilliam, the institute says that 
''under the internal system, the person liable to pay VAT is 'the taxable person carrying out the taxable supply of goods or services'. In the absence of a specific derogation, a requirement to secure the tax due from another person—which may result in payment of that tax—sits uneasily with the clear terms of article 21(1)(a).''
 The institute goes on to cite the case of Balocchi v. Ministero delle Finanze dello Stato. Hon. Members may read that reference in the record in the usual way. 
 This is a serious matter, and while no issue has really been taken with the endorsement on the frontispiece of the Bill, many professionals have raised the issue on numerous occasions. It seems that there is a challenge to the Government's judgment.

John Healey: We always take the views and representations of such bodies seriously, but our judgment is compliant with the legislation, as is confirmed in the frontispiece to the Bill.

Michael Jack: Can the Minister satisfy the Committee that the legislation is compatible with the sixth VAT directive?

John Healey: The right hon. Gentleman and the hon. Member for Eddisbury posed the question whether the clause is ultra vires in relation to the sixth directive as well as in relation to the Human Rights Act 1998. The vires is in article 22.8 of the EC sixth directive, which means that it is entirely in order and that we obviously have the vires to take the provision.
 The hon. Member for Eddisbury tried to make the case for restricting the companies within the supply chain to which those extended security powers could be applied and suggested that the restriction should be on the basis of an association established by Customs and Excise between the companies. I must to say that to attempt to define something as precise as an association would give rise to an argument about degrees of association, which would make the measure ineffective. For the purposes of the measure, the relevant relationship between traders is their position in the same supply chain. 
 The hon. Member for Eddisbury asked who will represent Customs at a tribunal. It would either be its solicitor's office or, in important cases, Customs might instruct counsel.

Stephen O'Brien: The Minister has tried to address whether Customs and Excise must establish the associated chain of relationships between companies. When we are considering the clause, it is wholly legitimate to quote paragraph 1 of the explanatory note, which I sought to do, and to which he did not give a specific response. It is therefore incumbent on me to repeat the quotation in the hope that I can get an answer:
''This clause extends the powers that Customs and Excise currently have to require the provision of security where it is considered''.
 ''Where it is considered'' is in the passive voice: it is not considered by them; it is considered by the authorities. The statement of condition and circumstances is passive, which means that somebody has to make the judgment. Who will make the decision? I assume that it must be those who seek some form of payment or redress from those companies rather than those within the association. The quote continues: 
''where it is considered that a business is associated with other businesses whose pattern of trading poses a real threat to the proper collection of VAT.''
 We all agree with the final sentiment. However, the issue is that in order to restrict appropriately, the necessary association must be established.

John Healey: I have explained how missing trader fraud by which the Exchequer is systematically defrauded out of massive sums of money operates, and that it is rooted in supply chain relationships and trading relationships. The place in the supply chain is the relevant factor. I remind the hon. Gentleman that no company will have the power raised against it without a warning from Customs and without the power and provision to challenge the power in the
 courts. Customs will make a judgment, but it can be challenged through the tribunal.

John Burnett: Given the draconian nature of the provisions, what will be the burden of proof at the hearings? Will it be civil or criminal? If criminal, will the new Customs prosecution service now under the aegis of the Attorney-General be involved?

John Healey: It will be civil.
 The clause will allow us to disrupt the supply chains that underpin missing trader fraud. It will give us the powers that we lack to make further progress in stamping it out. Despite the best efforts of Customs, which has managed to control the expansion of missing trader fraud, we now need such powers, just as we needed them at the time of the pre-Budget report. Further action will increase the exposure of the main players and dramatically alter the risk-reward ratio for them. The clause is important and necessary. It is part of the fight against missing trader fraud and part of protecting huge amounts of money that are due to the public purse. On that basis, I urge the Committee to reject the amendments and support the clause as it stands.

Stephen O'Brien: I shall be completely frank and say that I am genuinely disappointed. I thought that the Government would at least take the opportunity to acknowledge that the arguments made in support of the amendments are genuine and have widespread support. I thought that I had made my opening remarks in a reasonable manner. I am aware that there is pride of authorship and so on in these situations, but I was not out to fight some war of pride about who had it right the first time.
 These very serious issues affect the rights of individual citizens and the settlement between them and the public authorities. At the very least, I had hoped that the Economic Secretary might have said, “We do not like your amendments, but you have raised important points. Therefore, we will go away and draft our own amendments.” That might have tempted me to withdraw the amendments. Instead, as we discovered on the Floor of the House, the Government wrap all their arguments in either anti-avoidance speak or the need to address significant tax evasion. 
 Let us not play games. We all want to avoid stepping into the trap of thinking that we have to present arguments that could prevent the Treasury, Inland Revenue or Customs and Excise from collecting due and proper taxes. We are all responsible for maintaining the settlement between taxpayers and the public authorities, but it may be used as a cloak to stifle legitimate concerns about striking the wrong balance. 
 The amendments were modestly drafted, given that some representations that we received asked to have the entire clause deleted. They said that the measure was draconian. That word was used by the hon. Member for Torridge and West Devon (Mr. Burnett), who also asked who the prosecuting authority would 
 be in a criminal as opposed to a civil action. The Economic Secretary sought to defend his position on that matter, because the Attorney-General has had to take the prosecution processes of Customs and Excise under his wing, given the very serious concerns about and abysmal track record of the prosecuting authorities in Customs and Excise, about which the Economic Secretary and I have recently debated on the Floor of the House. 
 At present, Customs and Excise is not covered in glory over its ability to make judgments about the rights of the citizen and its powers­and that is in an area in which its powers have been properly and more fully qualified. The very guidance that the Government issued has been reissued. We have seen the way that Customs and Excise used its powers to deal with various imports coming into the country in recent months and years. 
 I would like to have confidence that we are dealing with a public authority in which we can place considerable trust, but it is not actually appropriate that we as legislators, whether in Opposition or in Government, should place such trust in it in any event. Our duty is to stand up for the citizen and for our constituents in order to ensure that they have proper protection. Unless such checks and balances are in place, the state is almighty and is always open to abuse.

David Laws: I agree with the case that the hon. Gentleman is developing. Does he agree that the minimum that would have been helpful from the Minister would have been an agreement to incorporate in the Bill some of the safeguards on which he touched in his comments? Then it would be clear what they were, and we could debate them, rather than have to rely upon the good faith of Customs and Excise.

Stephen O'Brien: The hon. Gentleman puts it succinctly, appropriately and accurately. I am grateful for the support and consensus. I realise that, ultimately, if the Government wish to whip their vote, we are outnumbered. However, it is our duty to challenge attempts to pass other than proper and good law. I sense­perhaps I am overoptimistic­that some of my arguments have struck a chord with Labour Members. I do not say that they agree with me entirely, but they recognise that the issues are genuine and that it would be appropriate for the Minister to acknowledge that there was a chance to look at a review.
 In the absence of an offer from the Government to table their own amendments on Report, we must press the matter to a vote for no reason other than to stress the importance of recognising that the Government's case has not been made. We must register our disapproval on behalf of all citizens and taxpayers whom we represent, as well as the professional bodies who have made such thorough representations to us.

Michael Jack: Does my hon. Friend agree that the Minister could have taken a lot of the steam out of the situation if he had volunteered to produce a note of explanation or to circulate to the Committee
 the Customs practice note that will no doubt accompany the operation of the clause, to assuage our concerns about how it will operate in the real world?

Stephen O'Brien: That would have been very beneficial and, for the Government, an advantageous thing to have done towards persuading us of their argument. Its absence has not been helpful. We are considering the potential legal cost and hassle that individuals will face when they have to defend themselves in the civil courts because things have got out of control due to the fact that they are in a chain­whether or not Customs and Excise, in the absence of an appropriate measure in the Bill, has to make any effort to discover whether they are in association.
 Above all, particularly for small companies, it is a matter of reputation. Once company directors or sole traders become engaged in such matters­which are often widely known­their reputation is under threat. That can kill a small company before it has had any chance of redress and that is why it appears disproportionate. The Government are seeking to reverse the natural burden of proof that should exist when we, as democratic representatives, favour freedom under the rule of law. We are dealing with a proposed law in which that freedom is presumed not to exist unless proven. Although that might sound extreme, it looks as though the challenge is to the citizen, rather than to the authority, to make his case. It is incumbent upon us to register our great distaste and disapproval. I hope that the Government will understand that, having read what will now be recorded in the Official Report, not least because under the rules of statutory interpretation, the point that I made in an intervention on my right hon. Friend is correct. Because of the nature of the issues that we have raised, today's proceedings will be relevant and capable of acceptance and statutory interpretation.

Rob Marris: I must say that I accept the assurances of the Minister that warnings will be given. Does the hon. Gentleman not accept those assurances?

Stephen O'Brien: I do not take issue with the personal integrity of the Economic Secretary­of course I do not. Furthermore, it would have been helpful, as my right hon. Friend the Member for Fylde said, to have had a copy, at least in draft, of the intended guidelines. Clearly, the provision will not be included in the Bill according to the Economic Secretary's current thinking, so one would hope that the guidelines would include that. At the very least, we would be left to make a judgment on what is likely to be the behaviour of those practising under those guidelines, as opposed to those who simply have an obligation to do so under statute.
 I also argued that we should make sure that the right of recovery from the party that had failed to pay back in the associated chain should be enshrined in the statute. Although the redress is there through the civil court, if it was a statutory expectation it would give rise to a presumption that there was that right of recovery, which would get the whole civil case­if it came to that­off to a more favourable start. That may save costs.

John Healey: It may be helpful if I make it clear to the hon. Gentleman and his right hon. Friend the
 Member for Fylde that the statement of practice is included in the public notice issued by Customs and has been available since Budget day. It is public notice 700/52 and I will leave a copy of it in the Library to help Committee members.

Stephen O'Brien: I am grateful to the Economic Secretary. It would be completely futile to pretend that I had taken that document on board, but it would have been helpful in anticipating the arguments that were adduced today to have had a copy of it on the Table in the Committee Room. It is clearly relevant to our considerations today, and we are being asked to place trust in the operation of that guidance, which was published on Budget day. As the Economic Secretary will be aware, however much this is an important argument, all of us have been under a tremendous work load in order to try and master all that we have to deal with during the coming days and weeks. I am grateful to the Economic Secretary for pointing the document out. I will certainly study it, but in the absence of knowledge of it, I shall continue to press my amendments to a vote.
 Question put, That the amendment be made:­
 The Committee divided: Ayes 9, Noes 16.

Question accordingly negatived. 
 Amendment proposed: No. 1, in 
clause 17, page 15, line 42, at end insert­{**pa**} 
 '(6) If the Commissioners enforce their security to secure payment of any VAT that is due from a person other than the taxable person, the taxable person may recover the amount of that VAT from that other person.'.{**pa**}­[Mr. Stephen O'Brien.]
 Question put, That the amendment be made:­
The Committee divided: Ayes 9, Noes 16.

Question accordingly negatived. 
 Amendment proposed: No. 85, in 
clause 17, page 16, line 6, leave out subsection (7).—[Mr. Stephen O'Brien.]
 Question put, That the amendment be made:—
The Committee divided: Ayes 9, Noes 16.

Question accordingly negatived. 
 Clause 17 ordered to stand part of the Bill.

Clause 18 - Joint and several liability of traders in supply chain where tax unpaid

Stephen O'Brien: I beg to move amendment No. 86, in
clause 18, page 16, line 36, after 'payable', insert 'by the supplier'.

John McWilliam: With this it will be convenient to discuss the following:
 Amendment No. 87, in 
clause 18, page 16, line 37, leave out from first 'supply' to 'would' in line 38.
 Amendment No. 121, in 
clause 18, page 17, line 14, after 'if' insert 'he knew'.
 Amendment No. 122, in 
clause 18, page 17, line 17, leave out 'on the open market' and insert 
 '(taking account of the circumstances of the market in which such prior supply took place as were known to him).'.
 Amendment No. 88, in 
clause 18, page 17, line 24, at end insert— 
 '(8A) Where any VAT becomes payable and is paid by a taxable person pursuant to this section he shall be entitled— 
 (a) to recover that amount from the supplier, and 
 (b) for that purpose to require the Commissioners to give him a certificate specifying that amount, 
 and any such certificate shall be conclusive evidence of the facts stated in it.'.
 Amendment No. 2, in 
clause 18, page 17, line 31, at end insert— 
 '(11) A person served with a notice under this section may recover any amount that he pays to the Commissioners pursuant to the notice from the person who, apart from this section, would be liable for the VAT specified in the notice.'.

Stephen O'Brien: Clause 18 has been rightly observed to be strongly linked to clause 17, so some of the issues pertaining to clause 18 have already been debated.
 There remain some issues in my opinion and that of my right hon. and hon. Friends, which is why we have tabled the amendments. Recognising your earlier guidance about the way in which the amendments will be taken, Mr. McWilliam, I flag up at this point that amendment No. 2 will not be pressed. It has been replaced by the improvements in amendments Nos. 86, 87 and 88, which we tabled later than amendment No. 2, our original amendment.
 It will be helpful to examine the amendments together and I suspect that that will necessarily involve something of a stand part debate, with your guidance Mr. McWilliam.

John McWilliam: Order. The hon. Gentleman is right. Again, the amendments eat the clause and in such circumstances we shall have the stand part debate along with the amendments.

Stephen O'Brien: I am grateful for that confirmation. It will make it more efficient for us to be able to go through the clause.
 The clause makes certain businesses in a supply chain jointly and severally liable for tax that has not been paid by a missing trader. That was effective from 10 April this year. The measure is restricted to telephones, telephone parts and accessories and computer equipment, including parts, accessories and software. 
 There is an increased risk of doing business that involves trading in specified goods, so any business unwittingly caught in a supply chain involving a missing trader fraud will need specialist advice. 
 It may help the Committee if I read from a letter dated 15 April this year, which was helpfully sent, as a constituency matter, by Sir Nicholas Winterton to me and my colleagues in the shadow Treasury team. The letter is from a Dr. Dwek, who is a constituent of my hon. Friend the Member for Tatton (Mr. Osborne). Fortunately, I spotted that as my hon. Friend came into the Room, so I have been able to give the proper courtesies, but I thought initially that I was raising the case on behalf of Sir Nicholas. In his letter to the Chancellor of the Exchequer Dr. Dwek says: 
''Dear Chancellor,
In your recent Budget Statement you referred to the changes in the VAT regulations for the mobile phone and computer industry, in order to avoid VAT fraud, and this is much welcomed by the trade.''
 That is why the letter is important: it sets the clause in context. He goes on: 
''I know this has been a serious problem and this is now being addressed through consultation documents, some of which appear to be entirely reasonable, and other suggestions could seriously undermine the trade, which is a valuable export earner.''
 That is the nub of the issue. 
''Surely the simplest solution would be that, instead of paying the VAT over to the supplier, it is paid directly to the Treasury by TT—
 telephonic transfer— 
''or BACS, and on receipt of the funds by the Treasury a receipt could be issued which could then be passed on to the supplier. In this way there could be no VAT fraud and the Treasury would collect its share of VAT at the point of sale. Simple, but quite effective.
Since my business is involved in the trade of mobile phones, we shall of course be making a full submission . . . 
 However, there is one item of the draft new legislation, which does not make sense, that is: Customs will presume that a taxable person—
 Dr. Dwek emphasises the following— 
''had reasonable grounds to suspect'' that VAT had not, or would not be paid, on goods supplied to it in two circumstances;
1. The purchase price of the mobile telephones was lower than the price, ''the lowest price that might reasonably be expected to be payable for them on the open market''. (Section 77A(6)(a) of the draft legislation) 
 2. The purchase price of the mobile telephones was, ''less than the price payable on any previous supply of those goods.'' (Section 77A(6)(a) of the draft legislation). 
 The purchase price of mobile telephones fluctuates''—
 that is a fairly obvious point— 
''according to market conditions and because of the uncertainty created now by the new measures, there are so many mobile phones on the market that the price has dropped considerably, thus any trader now operating could fall foul of these two items, and this cannot be right.
Finally, the measures introduced contain so much lack of definitions, and have created so much uncertainty that the trade has come to a virtual standstill.''
 Mr. Joe C. Dwek CBE, who has made many public-spirited contributions as well as obviously being a successful businessman, has put his personal reputation on the line in suggesting that these measures have already 
''created so much uncertainty that the trade has come to a virtual standstill.''

Michael Jack: Is my hon. Friend also aware that Joe Dwek was a former chairman of the Confederation of British Industry in the north-west?

Stephen O'Brien: I am grateful to my right hon. Friend, who is able, with his considerable experience, to clarify that for me. As a former elected member of the CBI's south-east regional council, I know that there is proper respect for the CBI's representation of business. The Government have placed an enormous value on the views and advice of the CBI. Dr. Dwek concludes:
''In the interim, therefore, there ought to be more clarification.''

Rob Marris: Since the letter was written on 15 April, has Dr. Dwek made the full submission to which he refers? If so, will the hon. Gentleman refer to the full submission?

Stephen O'Brien: I am conscious of the fact that I have taken a liberty in reading so much of the letter in Committee. I do not plan to go into the submission at great length. I am also conscious that Dr. Dwek's Member of Parliament is in Committee and may be able to assist—I do not want to steal all the thunder from my hon. Friend the Member for Tatton, who has the most thunderous voice in Committee.

John McWilliam: Order. My co-Chair, the hon. Member for Macclesfield (Sir Nicholas Winterton), has done nothing more than pass on a letter from someone who is not his constituent, so he has no interest in the matter.

Stephen O'Brien: I am grateful that that is on the record.

George Osborne: May I make it clear that Dr. Dwek has written to all members of the
 Committee? The information is available for anyone to use in the debate.

Stephen O'Brien: I am grateful because one often receives letters and does not know to whom they have gone.
 It is clear from the example that up to now a supplier has been liable only to Customs and Excise for output VAT on goods that they have supplied. There have been a few limited exceptions, such as reverse charge VAT on the buyer in the case of a service brought in from abroad, but the ultimate principle remains the same. 
 It is back to the drawing board with parties A, B, C, D and E. I have tried to distil the raft of representations that we have received from the Chartered Institute of Taxation, the Institute of Indirect Taxation, the Institute of Chartered Accountants in England and Wales, the Law Society, Dr. Dwek, PricewaterhouseCoopers and others. This is the best distillation that I can come up with and I hope that it helps the Committee. Under the new provision, if A makes supplies to B, who makes supplies to C, who makes supplies to D, who makes supplies to E, C can be made liable not only for their own output VAT on those goods and services, but for that of A, B, D or E if A, B, D, or E fail to pay. C must have known or have had reasonable grounds to suspect that the person in question would not pay their proper VAT, which relates to the Value Added Tax Act 1994 new section 77A(2). ''Reasonable grounds to suspect'' is an objective test—new section 77A(6) and (8) also relates to the issue. 
 The Customs and Excise paper ''VAT Strategy: Joint and several liability—Consultation on reasonable checks'' dated April 2003 proposes the publication of a statement of practice on the checks that Customs expects C to take. The new liability is currently limited to supplies of telephones, computers and associated equipment, but the Treasury has the power, which is contained in new section 77A(9), to add other types of supply ad lib. C is given no express right to claim a refund from A, B, D or E, which appears to be permissible under article 21.3 of the sixth directive, but it must be questionable whether the article permits such a wide provision. 
 It would be a good idea if the Chancellor of the Exchequer had to state on the front of the Finance Bill that the provisions are compatible with all EU directives, just as he has to state that they are compatible with the Human Rights Act 1998. In VAT matters, we would all find that particularly helpful for future reference. I hope that the Economic Secretary and those who have a supporting role will take that on board. 
 I shall carry on with the diagrammatic example, which seems to have emptied the Government Benches. C has a right of appeal to the VAT tribunal, under subsection (2), but only on the question of whether he has on the facts a liability under the new section. The tribunal has no discretion to let him off. HM Customs and Excise says that that provision is necessary to deal with missing trader 
 frauds and that it will apply the provisions reasonably. However, that is not written into the legislation. I suspect that there are strong echoes from the debate that we have just had on clause 17. The provision goes over the top again, and will expose many small businesses that do keen deals with other businesses to great worries and liabilities. 
 One answer would be to leave the clause out altogether. However, I suggest an amendment that restricts C's liability to B's unpaid VAT, and also gives C an express right, for what it is worth, to reclaim from B any money that C has to pay under the provisions. Amendments Nos. 86, 87, 88 address that point and the right of recovery. I hope that that is clear to members of the Committee. 
 There are other issues that need to be considered carefully. It is very much the opinion of the Law Society—the chairman of the VAT and duty sub-committee of the Law Society, Mr. Gary Richards helpfully submitted the information—that the words ''if he knew'' should be inserted in new section 77A(6). That is what we propose in amendment No. 121. There again we have an echo of the point raised by the hon. Member for Wolverhampton, South-West, which was particularly perceptive. I was somewhat disappointed that he concluded that he ought to vote against the amendments. As he is not in his place, I will have to let that rest. 
 Amendment No. 121 invokes that essential element of knowledge that harks back to all the arguments that we have adduced about the rights, checks and balances that should be taken into account in a proper settlement between individuals and the state. Amendment No. 122 relates to the end of paragraph (a). It would 
''leave out 'on the open market' and insert '(taking account of the circumstances of the market in which such prior supply took place as were known to him).'''
 It is patently along the same lines. The purpose is to restrict the application of the clause to cases of actual knowledge. In the last discussion, it was disappointing that that point was not taken sufficiently seriously. 
 The Law Society states that, in its current form, the clause applies to a person who knew, or had reasonable grounds to suspect, that VAT on transactions already entered into, or that may subsequently occur, will not be paid. However, there is a presumption, albeit rebuttable, that that person has reasonable grounds for suspecting that the VAT will not be paid if the goods offered to him have been offered for a price less than that paid on any previous supply of those goods. If A sells goods for £1,000 to B, who sells them for £1,050 to C, who sells them for £900 to D, D is presumed to have reasonable grounds for assuming that VAT will not be paid. There may be many reasons why C is prepared to sell the goods to D that are not tax-evasion driven. More importantly, commercial confidentiality makes it very unlikely that D will be able to find out the terms of the bargain between A and B and between B and C. I am happy to adopt the recommendation of the Law Society that 
''clause 77A(6)(b) could only operate where, in this example, D has knowledge of the prices previously paid in the supply chain.''
 Without having to recite at length the welter of representations that I and other hon. Members have received on the matter from the reputable organisations that I listed earlier, I hope that it is as clear as it can be that we have yet another example of the measure being rough, to say the least, and probably unfair. We need seriously to reconsider the balance of rights and duties between the citizen taxpayer and the public authority. I hope that on this clause the Government may be prepared to take the track that I advocated in the response to clause 17 and forlornly expected the Minister to adopt. Given the nature of the arguments advanced in that debate, we want to draw attention to the importance of our arguments by dividing the Committee on the amendments. However, I hope the Minister will show that that will not be necessary.

David Laws: The hon. Member for Eddisbury has made his point extremely effectively on behalf of Opposition Members, as he did on clause 17. Because the clause is drafted very widely, many of the issues are relevant to the previous debate. I do not want to squeeze every bit of juice from the letter from the constituent of the hon. Member for Tatton, but Dr. Dwek summed up the situation that applies to clause 18 perfectly when he said that the law as proposed is too penal, subjective and uncertain.
 I have four, rather than the usual three, questions for the Economic Secretary to follow up the points made by the hon. Member for Eddisbury. First, does the Economic Secretary really believe that it is necessary to pursue what is essentially an open-ended chain in the way proposed? Does he think it can be done in a way that will be consistent and fair for all the businesses that may be caught in this potential trap? Did his advisers in the Treasury propose any alternative that may have been considered in respect of similar problems in the past that could have the same effect in safeguarding revenues without the draconian consequences in the clause? 
 Secondly, can the hon. Gentleman clarify whether clause 18 will also relate to the issues of bad debts and fraud? Thirdly, the Economic Secretary will be conscious that many of the tax practitioners who have opposed, or expressed concerns about, clause 18 feel that the issue of prior warning to third parties is even weaker in clause 18 than it is in clause 17.

Michael Jack: Does the hon. Gentleman agree with me that one of the principal weaknesses of the approach is its dependence on interpretation and anticipation of conditions in a fast-moving marketplace?

David Laws: The hon. Gentleman is entirely right; it is a fast-moving marketplace and I will come to that matter in a moment. In addition, if the Government wish to introduce measures on such an issue, they should have the courage to introduce some clarity and put them in the Bill rather than rely on the confidence to exercise discretion.
 My fourth question is about safeguards in respect of the assessment that will have to be made about whether there are reasonable grounds to suspect a 
 particular entity, based on the price that was paid in the open market. There might be circumstances in which it would be reasonable to be suspicious of a transaction that occurred at a price that was very much below the market price. 
 Some of those who have made representations on clause 18 have pointed out, quite sensibly, that there are particular products, such as those that clause 18 affects, for which there can be a sudden step effect. For example, a new product that came on to the mobile phone market could cause the price of an existing product that was considered to be inferior to move down very sharply. Therefore, the way in which the Government has drafted the clause and introduced the proposals connected with clause 18 could be open to confusion and controversy with respect to items that undergo sharp movements in price.

George Osborne: It will not surprise the Committee that I, too, am concerned about the effects that the measures in the clause will have on a perfectly legitimate business—the mobile phone business—and could bring to an end a vital trade and a huge export earner for the UK mobile phone industry. I am grateful to Dr. Joe Dwek CBE, who has brought his expertise to bear on the issue, and who wrote to all members of the Committee, including the hon. Member for Wolverhampton, South-West, who has now discovered the letter among his pile of correspondence.
 According to the proposed legislation, as my hon. Friend the Member for Eddisbury ably demonstrated to the Committee, Customs will presume that a taxable person has ''reasonable grounds to suspect'' that VAT had not or would not be paid on goods supplied. Subsection 77A(6) sets out those reasonable grounds, the first of which is that if the purchase price of a mobile phone was lower than 
''the lowest price that might reasonably be expected to be payable for them on the open market''
 and the second of which is if the purchase price of a mobile telephone 
''was less than the price payable on any previous supply of those goods.''
 That is what the Government seek to enact in law. 
 The objection to those provisions centres on the presumption of ''reasonable grounds to suspect'', because the presumption presumes—if I may put it that way—that a taxable person is aware of facts that a taxable person could never know in a commercial environment, or reasonably be expected to find out. The price paid for products in a free market is often a commercial secret, but the clause presumes that a person might know what that price might be. 
 We might take as an example the presumption of suspicion where the price of the mobile phones was 
''the lowest price that might reasonably be expected to be payable for them on the open market.''
 Those of us who are familiar with the mobile phone industry—I suspect that we are all customers of the mobile phone industry—will know that it is very difficult to establish the lowest price payable for any one consignment of mobile phones. The price of 
 mobile phones, like that of shares, fluctuates on day to day, in accordance with market conditions, and the price depends on the amount of stock—

John McWilliam: Order. I can tell the hon. Member for Tatton that the standing order that says that tedious repetition is not to be allowed does not necessarily apply to one hon. Member. If another hon. Member is repeating arguments that have already been made, they can also fall foul of it. The hon. Gentleman should consider this as a yellow card.

George Osborne: I hope that if I accumulate enough yellow cards, I will be suspended. I live in hope.
 The serious point is that if a single mobile phone manufacturer dumps a large number of mobile phone handsets on to the market on a particular day, the price can vary by as much as £10 per handset. Mobile phones are also subject to the whims of fashion. I have a 17-year-old brother, and every time I go to my parents' house for lunch or dinner he has a new mobile phone. It irritates me and my other brothers—and my parents even more—that he has a new mobile phone every time we see him, but such phones are subject to fashion. 
 It is simply not possible for the industry to ascertain the open-market value of a mobile phone. It would be fine if Customs were saying that the price had to be so low that it was obviously suspicious. If it were the equivalent of someone saying, ''You can have a Rolls-Royce for £5,000'', anyone would know that something dodgy was going on. If that is the spirit of the Bill, it should be explicit in the wording, but it is not. 
 There is also the operational presumption that VAT has not been paid, because the telephones were purchased at a price below that paid by any previous purchaser in the supply chain. Again, that presumes a knowledge that is not available in the commercial market. How is someone supposed to know how much the person who supplied them with a consignment of mobile phones paid for it, or how much the person who supplied that person paid for it? That is unknowable in a free market. The industry could therefore fall victim to the clause through no fault of its own. 
 Finally, there appears to be an incongruity between the Bill and the Customs and Excise consultation document. The Minister will be aware that paragraph 13 of that document states that Customs will deem that a business knew or had reasonable grounds to suspect that VAT on a supply had not or would not be paid if 
''it has made a gain or benefit from the suppliers' failure to account for the VAT''.
 The concept of gain by the taxable person is not contained in the Bill.

Rob Marris: On a point of order, Mr. McWilliam. Is it in order for the hon. Gentleman to read from a letter without saying that he is doing so, as the hon. Gentleman just did with Dr. Dwek's letter?

John McWilliam: It is not in order for hon. Members to read at all, unless they say they are going to quote something specific.

George Osborne: I was not reading. The hon. Gentleman will not find a reference to my 17-year-old brother in the letter to which I referred.
Rob Marris rose—

John McWilliam: Order. I have explained the situation.

George Osborne: I am using hand-written notes. They are not a verbatim account.
 There is a serious point. There appears to be an incongruity between the Customs consultation document and the Bill, and I would be grateful if the Minister could address it. The industry has serious concerns about the effects of the clause, and it is right that we bring them to the Committee's attention and ask the Minister to respond.

Michael Jack: I shall move away from the rather difficult issue of mobile phones in the time that remains before the Division. The Institute of Indirect Taxation has raised further questions about the practicalities of the clause, and I would be grateful if the Minister could respond.
 Paragraph 14 of the institute's submission to the Committee suggests that many people in the supply chain could be held liable for missing unpaid tax. Given the operation of joint and several liability, the institute postulates that everyone in the supply chain could be held liable for the total amount of the missing tax, even though only one person in the supply chain was causing the problem. I would be grateful if the Minister could enlighten us as to how the clause will work in reality. 
 The institute notes that there are other issues. Paragraph 18 of its submission states that Customs is consulting on what tests it might be reasonable to expect a trader to carry out as part of the operation of the clause. Will the Minister enlighten us on that? We can then try to deal with the concerns of individuals who feel that they may unwittingly be caught up in a supply chain in which VAT will ultimately go unpaid. 
 Those two important practical questions illustrate once again that some of the major concerns that have been raised about the clause—particularly through the amendments—reflect how these wide-ranging, widely drafted powers will be used in practice.

John McWilliam: Order. I think that it would be wrong to call the Minister to speak at this stage because there will shortly be two Divisions in the Chamber. They must be called by 5.6 pm, so I shall suspend the Committee until 5.35 pm.
 Sitting suspended. 
 On Resuming—

David Wilshire: On a point of order, Mr. McWilliam. When my hon. Friends and I were preparing for the Committee, my hon. Friend the Member for Eddisbury made me aware that he had a major speaking engagement tonight in Cambridge. I took it on myself to say that I could see no reason why we would be here after 5 o'clock, so he did not withdraw
 from his engagement. I make no criticism of the Government for that; I did not ask for an undertaking that we would finish by 5 o'clock.
 Conscious of the fact that he had moved the amendment, my hon. Friend wished to be here as a matter of courtesy to the Committee. I took it on myself to persuade him to go. If anyone in this Room considers that there is a degree of discourtesy to the Committee, the blame is entirely mine, not my hon. Friend's. I hope that the Committee will accept that.

Dawn Primarolo: Further to that point of order, Mr. McWilliam, may I say to the hon. Members for Spelthorne (Mr. Wilshire) and for Eddisbury that I am sure that all Committee members appreciate that these things sometimes occur? The Committee will take no umbrage and understands the pressures on Members' time. I am happy to put on the record our complete understanding and agreement that he is unable to be here at this stage. We shall miss him, but we shall soldier on.

John McWilliam: Order. I thank the hon. Members for Spelthorne and for Eddisbury for their courtesy. At this time of evening proceedings, I like to tell the Committee my views on suspending for dinner. I am not yet in a position to do that, but as soon as I have made up my mind, I shall let hon. Members know.

John Healey: I am sure that, like me, the whole Committee wishes the hon. Member for Eddisbury a safe journey to Cambridge, although whether the Cambridge Conservative Association really qualifies as a major speaking engagement is for others to judge. I know that the hon. Gentleman will look very carefully at the full debate, including the remarks that I shall make now. I hope that he will be satisfied that I have covered the points that he and his hon. Friends made.

John McWilliam: Order. The hon. Member for Spelthorne did not make it clear whether it was the Cambridge near Lincolnshire or the Cambridge in Massachusetts, which is rather close to where I went to university.

John Healey: The hon. Member for Eddisbury has his work cut out if he needs to get to Cambridge, Massachusetts by 7.15 pm.
 I turn to the clause and the amendments. I understand the concerns raised by hon. Members and professional institutions and institutes, and the concerns of businesses in the sectors that are bedevilled by this form of missing trader fraud. The Government do not seek to take these powers lightly. We have examined other options, but none of the options that we looked at would achieve the same effect, which is what the hon. Member for Yeovil asked. The scale and the nature of fraud involving collusion in the supply chain require us to take the measures in clauses 17 and 18. 
 When Customs discovers a transaction in relation to which a missing trader fraud is suspected, it will investigate that trading activity and the other businesses involved in the supply chain. If it establishes that those other businesses knew or had 
 reasonable grounds to suspect that the VAT in that supply chain would go unpaid, the measure in clause 18 ensures that Customs can recover the unpaid VAT from any businesses involved in that supply chain. 
 The legislation presently specifies as potential targets only those businesses in the telephone and computer sectors that are either complicit in, or complacent about, missing trader fraud. We hope that the Bill will form a substantial deterrent against that. We also hope that it will ensure fairer competition within those trade sectors by targeting businesses that are cutting corners or colluding with fraudsters. 
 Customs and Excise has published a draft statement of practice that sets out the reasonable steps that we expect businesses in those sectors to take. We are consulting on that matter, and have invited comments from business to help Customs and Excise to ensure that the steps, when finalised, are practical and fair. That consultation is still going on, and closes on 10 June. After that, we intend to produce robust guidelines that will ensure, as far as possible, that businesses are not penalised if they unwittingly end up in a missing trader supply chain. That will be published as a Customs and Excise public notice. 
 The right hon. Member for Fylde raised the question of businesses that may unwittingly become caught in such supply chain. The public notice, based on the present draft statement of practice, shows the reasonable steps businesses can take to establish the integrity of their customers, suppliers and supplies. Legitimate businesses have nothing to fear, but they have a role in ensuring that they are not unwittingly caught up in a crime. If a business has traded honestly, and Customs is satisfied that it has genuinely taken all reasonable steps—which will be set out in the public notice—to ensure that it has not become involved in a supply chain where VAT has gone—or will go—unpaid, Customs will not apply the measure. 
 We will include safeguards in the provision, and in the application of the rules, in order to protect innocent and unwitting businesses. The legislation includes safeguards in relation to any presumption by Customs of guilty knowledge, by providing the ability for the business to rebut that with a reasonable explanation. Moreover, Customs will be careful to exercise their discretion in favour of businesses that can demonstrate that they have genuinely taken all reasonable steps to ensure that they have not become involved in a supply chain where VAT has gone—or will go—unpaid. 
 Apart from the rights of the courts to review the exercise of the direct discretion of Customs, the legislation has an in-built right of appeal to an independent VAT and duties tribunal against the imposition of any joint and several liability notice.

Michael Jack: Can the Minister assure me that, when the mechanism for an independent tribunal is invoked, every effort will be made to deal with matters in a timely fashion? My constituency mail indicates that—from time to time—when representations have to be made in complex matters, it can take a very long time to sort out. We have discussed the viability of
 businesses. People will wish to hear an assurance that those matters will be brought swiftly to a conclusion.

John Healey: That is an important point. Timing is a relevant factor in the delivery of due process.
 I will address amendments Nos. 86 and 87, which seek to restrict the circumstances in which a business is served with a joint and several liability notice to recover the unpaid VAT. The clause, as currently drafted, enables Customs to serve notice on any business when it knows—or has reasonable grounds to suspect—that another business in that supply chain would not pay some or all of its VAT. The effect of the two proposed amendments would be that notice will be served on a business only where Customs knows—or has reasonable grounds to suspect—that some or all of that business's own suppliers' VAT would go unpaid. In practice, that means that only the first business in the supply chain, following the one that had deliberately not paid its VAT, could be held jointly liable for the unpaid VAT. No other business further along that supply chain could be held severally liable for the unpaid VAT, and by turning a blind eye to the fraud, it would still gain an unfair financial advantage because of the artificially lowered price of the goods at the start of the supply chain. It could do so without any fear of being held liable for any unpaid VAT.

David Laws: In relation to the unpaid tax that we are talking about, would the Minister clarify whether it is unpaid simply because of fraud, or could it be because of the economic position of the business in question?

John Healey: We are looking at the problem of fraud, so we are discussing specifically the prospect of the failure to pay VAT that is due because of fraud.
 If the amendment is passed, a fraudster could easily exploit the loophole that the amendment creates by deliberately inserting a business with no assets next to it in the supply chain. The business would become liable for the fraudster's unpaid VAT, have little or no assets with which to pay the debt, and become insolvent while protecting the fraudulent activity of the ongoing supply chain. To accept the amendment would not only severely restrict the application of the clause, but seriously undermine its effectiveness in tackling missing trader fraud. 
 Of amendments Nos. 121 and 122, No. 121 is the main one and No. 122 is consequential. Together, they would remove the presumption of knowledge where Customs can demonstrate the tests currently laid out in subsection (6) of new section 77A are met, and instead, place on Customs an evidential burden of establishing knowledge. The clause enables Customs to presume that a business has reasonable grounds to suspect that VAT would go unpaid in the same supply chain when the price paid for the goods was either less than the lowest open market price, or less than the price paid on any previous sale of those goods. 
 The hon. Members for Tatton and for Eddisbury both asked how one could tell that prices are below the market rate. Those who trade in the sector are 
 generally aware of the market price day to day. In most cases of missing trader fraud, transactions for goods such as mobile phones will take place at such a substantially lower rate than any plausible current market rate that it will be transparent that they are part of a fraudulent activity.

George Osborne: What the Minister says is very reassuring. Is he confirming that Customs and Excise would exercise a considerable degree of discretion and apply the law only where it was obvious to any reasonable person that the price being offered was much lower than what was available on the open market?

John Healey: I am confirming that it will be relatively straightforward to establish the market price. The practice of such fraud, and our experience of trying to tackle it, means that the goods are sold on for substantially below the going market price. Therefore, it should be transparent that such activity is fraudulent, not commercial. The clause also enables a business to rebut Customs' presumption of knowledge. For example, a business could provide a legitimate reason for the low purchase price of the goods, and demonstrate that the price benefit was not as a result of unpaid VAT.
 The proposed amendments would require Customs to demonstrate that a business actually knew that a price paid for the goods was less than the lowest open market price, or less than the price paid on any previous sale of those same goods. To obtain that type and level of evidence would, on the basis of our experience, be extremely difficult and render the measure largely ineffective. To accept the amendment would restrict the application of the clause and seriously undermine its effectiveness. 
 Amendment No. 88 is a consequence of amendments Nos. 86 and 87. It would entitle the business that is liable to pay its suppliers VAT by virtue of the clause to recover that amount. It also requires Customs to provide a certificate that will act as evidence that the business has paid the VAT. In many ways the arguments are the same as those that we had on clause 17. There is already recourse for the recovery of debts through the civil litigation process. The person who has paid the VAT should seek to prove a debt against the person who should have paid it in the first place, and should gain redress through the courts in the normal way. There are no legal vires in EU law to introduce an amendment such as the one that is proposed. To do so in the UK would, therefore, be illegal. 
 The hon. Member for Yeovil asked me a series of questions. I have answered some of them. The measure will not apply to bad debts. There is prior warning, but it is different from that in clause 17—the business will receive a notification letter providing 21 days in which to explain legitimate actions. The answer to his question about alternatives is that we have, as the Committee would expect, studied a range of options to achieve the objective of the clause. None would have the effect that we believe we need. 
 I hope that I have demonstrated that the clause is necessary and that it is not a step that the Government are taking lightly. Our operational activity in Customs has consistently shown that for this type of missing trader fraud to work, it needs businesses that are run by fraudsters, are in cahoots with them or are deliberately turning a blind eye and allowing themselves to be sucked into a contrived supply chain, benefiting themselves by gaining an unfair advantage over legitimate businesses. Honest businesses taking reasonable steps would not trade in such supply chains. The clause introduces serious consequences for businesses that knowingly engage in a supply chain in which VAT will go unpaid. It is important and necessary, and I commend it to the Committee, while urging the Committee to reject the amendments, which, in your words, Mr. McWilliam, would ''eat'' the clause.

John McWilliam: I do not think that I meant that they would eat the clause in any sense other than that they would cover the whole sense of it. I have no view about the clause one way or the other. However, I have a view about where we are now. Because the hon. Member for Eddisbury is not with us, and it was he who moved the amendment, it cannot be withdrawn and will have to be disposed of. I would be grateful if hon. Members would indicate their intentions with regard to the other amendments. However, they have not yet been formally put.

Howard Flight: I extend to you, Mr. McWilliam, the apologies of my hon. Friend the Member for Eddisbury. As stated, he understood that the proceedings were to end at 5 pm. As the Committee will have witnessed, he feels very passionately about these matters and is upset not to have been able to wind up on his amendments. I thank the Paymaster General for her kind comments on that situation.
 The issues are essentially the same as those under clause 17. The extent of the fraud is sufficiently large that it is understandable that any Government would want to take effective measures to combat it. However, it is necessary to make a delicate judgment between excessive authoritarianism and effectiveness. I stress that the legal community considers that both clauses stray too far on the side of excessive powers. Without intending any criticism of Customs and Excise, the history of its activities is such that it is not unreasonable for the citizen to have reservations about its having such strong powers, which could result in innocent parties being saddled with joint and several liabilities. To make the point another way, we cannot see why the principle of warning and knowledge cannot be written into the Bill. It is fine for the Minister to make the point that the various guidelines will, in essence, cover the fairness of the situation, but they are not part of the ultimate law and cannot be relied on. 
 We want to put the two principal amendments, amendments Nos. 86 and 121, to the vote. Amendments Nos. 87 and 88 follow from amendment No. 86 and amendment No. 122 from amendment No. 121. 
 The Minister said that the measure was intended solely for the mobile phone and computer industries. 
 My understanding is that the Bill gives the Government power to extend it to other areas without parliamentary consultation, so it is not quite right to say that it covers only those two industries. Secondly, the points that Dr. Dwek made about the volatile price of mobile telephones are entirely practical and somewhat undo the protection that the law is intended to give against price fluctuation. 
 As the Minister will know, the industry has ground to a halt, and not all its members are fraudsters by a long chalk. The Government should be concerned that that has been the result of the measures. We believe that it would still be possible to address the problem without straying so far towards overauthoritarianism. For that reason we wish to put the two amendments to the vote. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 17.

Question accordingly negatived. 
 Amendment proposed: No. 121, in 
clause 18, page 17, line 14, after 'if' insert 'he knew'.—[Mr. Flight.]
 Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 16.

Question accordingly negatived. 
 Amendments made: No. 61, in 
clause 18, page 17, line 33, at end insert— 
 '(2A) In section 84(3) of that Act (appeals not to be entertained unless the VAT has been paid or deposited, except where that would cause hardship) for ''or (q)'' substitute '', (q) or (ra)''.'.
 No. 62, in 
clause 18, page 17, line 34, at end insert 
 'except subsection (2A) which applies in relation to any appeal notice of which is given on or after the day on which this Act is passed'.—[Mr. Healey.]
 Clause 18, as amended, ordered to stand part of the Bill. 
 Further consideration adjourned.—[Mr. Sutcliffe.] 
 Adjourned accordingly at one minute past Six o'clock till Tuesday 20 May at five minutes to Nine o'clock.